POVERTY IN INDIA

Introduction
Poverty involves an infinite variety of circumstantial misfortune experienced both at the household level
and the societal level. Poverty has many faces, changing from place to place and across time, and has been
described in many ways. Extreme poverty strikes when household resources prove insufficient to secure
the essentials of dignified living. The very poor are those who can hardly afford more than one meal a day
and depend exclusively on a single source of income. That fragility is defined by a lack of education, the
absence of work opportunities, the diminution of household back up resources, and exclusion from
valuable social and decision-making networks. The most persistent poverty is found amongst ethnic
minorities, scheduled castes, tribal and indigenous people experiencing discrimination, nomadic
pastoralists, and landless laborer toiling on marginal land. Most often, poverty is a situation people want
to escape. So, poverty is a call to action - for the poor and the wealthy alike - a call to change the world so
that many more may have enough to eat, adequate shelter, access to education and health, protection
from violence, and a voice in their communities

Nature of Poverty
The proportion of people in BPL category is not the same for all economic categories and for all social
groups in India. The nature of poverty in the urban and the rural sector is different. In the rural sector, the
major group of the poor consists of landless laborers, small and marginal farmers, rural artisans, backward
classes and backward tribes. People who are poor in terms of the income are the people who belong to
the weaker section of the society. They are restricted to lower social status and are also vulnerable to
exploitation. Rural poor are people largely belonging to the lower caste and tribal groups. The major
economic problem of the rural poor is not unemployment but low productive employment.

In urban areas, poor people mainly comprise of unemployed, underemployed or persons employed in
various low productivity work such as street peddling, rickshaw pulling, etc., or employed in low paid jobs.
They live in slums and on pavements in metropolitan cities. They are, in fact extension of the rural poverty
itself because unemployed people in the rural areas migrate to cities in search of jobs. Most of the poor
in urban areas are either self-employed or working as low-paid workers in the unorganized manufacturing
or service sector of the economy.

Extent of Poverty
The extent of poverty can be understood through various indicators, which provide a clearer picture of its
scope:

1. Poverty Rate/Headcount Ratio

The most common measure of poverty is the poverty rate or headcount ratio, which indicates the
percentage of the population living below the poverty line—a defined threshold of income or
consumption. The poverty line differs by country; for example, the World Bank's international poverty line
is set at $2.15 per day (adjusted for purchasing power parity). This figure helps in assessing how many
people live in absolute poverty.

2. Depth of Poverty
This measure goes beyond the number of poor people and looks at how far below the poverty line people
are. It quantifies the poverty gap, which reflects the intensity of poverty. The poverty gap index calculates
the average shortfall of the population from the poverty line, expressed as a percentage of that line. A
high poverty gap indicates severe deprivation, where those in poverty are not just barely below the
poverty line but far below it.

3. Multidimensional Poverty Index (MPI)

Poverty is not just about income; it includes deprivation in health, education, and living standards. The
Multidimensional Poverty Index (MPI), developed by the United Nations Development Program (UNDP)
and the Oxford Poverty and Human Development Initiative (OPHI), assesses the extent of poverty by
evaluating multiple dimensions such as:

• Health: Child mortality, nutrition.

• Education: Years of schooling, school attendance.
• Living Standards: Access to clean water, sanitation, electricity, housing, and cooking fuel.

4. Rural vs. Urban Poverty

Rural areas often experience a higher extent of poverty than urban areas due to factors such as lack of
access to quality education, healthcare, and employment opportunities. In developing countries, most of
the poor still lives in rural areas, though urban poverty has been rising due to rapid urbanization and
inadequate infrastructure in cities to accommodate the growing populations.

For instance, in India, around 21.9% of the population lived below the national poverty line in 2011-12,
but the rate was higher in rural areas (25.7%) compared to urban areas (13.7%).

Causes of Poverty in India

All types of poverty and deprivation in India are caused by the following factors

1) Colonial Exploitation
Colonial rule in India is the main reason of poverty and backwardness in India. The Mughal era ended
about 1800. The Indian economy was purposely and severely de-industrialized through colonial
privatizations. British rule replaced the wasteful warlord aristocracy by a bureaucratic-military
establishment. However, colonial exploitation caused backwardness in India. In 1830, India accounted for
17.6 per cent of global industrial production against Britain’s 9.5 per cent, but, by 1900, India’s share was
down to 1.7 per cent against Britain’s 18.5 per cent.

2) Lack of Investment for the Poor

There is lack of investment for the development of poorer section of the society. Over the past 60 years,
India decided to focus on creating world class educational institutions for the elite, whilst neglecting basic
literacy for the majority. This has denied the illiterate population - 33 per cent of India – of even the
possibility of escaping poverty. There is no focus on creating permanent income-generating assets for the
poor people

3) Social System in India

The social system is another cause of poverty in India. The social subsystems are so strongly interlocked
that the poor are incapable of overcoming the obstacles. A disproportionally large number of poor people
are lower caste Hindus. According to S. M. Michael, Dalits constitute the bulk of poor and unemployed.
Many see Hinduism and its structure, called the caste system, as a system of exploitation of poor, low-
ranking groups by more prosperous, high-ranking groups.

4) India’s Economic Policies

In 1947, the average annual income in India was US$439, compared with US$619 for China, US$770 for
South Korea. But South Korea became a developed country by the 2000s. At the same time, India was left
as one of the world’s poorest countries. India had the Hindu rate of growth which stagnated at around
3.5 per cent from the 1950s to the 1980s, while per capita income averaged 1.3 per cent. India currently
adds 40 million people to its middle class every year. An estimated 300 million Indians now belong to the
middle class; one-third of them have emerged from poverty in the last ten years. At the current rate of
growth, a majority of Indians will be middle class by 2025. Literacy rates have risen from 52 per cent to 65
per cent in the same period.

5) Over-reliance on Agriculture
In India there is high level of dependence on primitive methods of agriculture. There is a surplus of labor
in agriculture. Farmers are a large vote bank and use their votes to resist reallocation of land for higher-
income industrial projects. While services and industry have grown at double digit figures, the agriculture
growth rate has dropped from 4.8 per cent to 2 per cent. About 60 per cent of the population depends on
agriculture, whereas the contribution of agriculture to the GDP is about 18 per cent.

6) Heavy population pressures

Although demographers generally agree that high population growth rate is a symptom rather than cause
of poverty and add to poverty. Mohmood Mamdani aptly remarked “people are not poor because they
have large families. Quite the contrary, they have large families because they are poor”. However, this is
a general argument in developing country that population growth is a major obstacle to development and
cause of poverty.

7) High Illiteracy
Indian literacy rate rose almost tenfold during the British era. In 1947, India’s literacy rate matched
China’s. However, in 2007, China reported at 91 per cent literacy rate versus 66 per cent for India. Now
India suffers from about 35 per cent illiteracy among the adult population. Literacy levels among SC, ST
and females are very low.

8) High Unemployment
There is high degree of underutilization of resources. The whole country suffers from a high degree of
unemployment. India is marching with jobless economic growth. Employment is not growing, neither in
the private sector, nor in the public sector. The IT sector has become elitist, which does not improve the
poverty situation in the country. Disguised unemployment and seasonal unemployment are very high in
the agricultural sector of India. It is the main cause of rural poverty in India.
Impacts of Poverty
Poverty has wide-ranging impacts that influence both economic and non-economic spheres. These
impacts create a vicious cycle that not only stifles individual and community development but also affects
the entire country's growth. Below is an explanation of the economic and non-economic impacts of
poverty.

Economic Impacts of Poverty

1. Regional Imbalances
Poverty often leads to stark regional disparities within a country. Certain regions, especially rural and
remote areas, tend to remain underdeveloped due to inadequate infrastructure, poor access to education
and healthcare, and limited economic opportunities. This results in economic imbalances where affluent
regions continue to grow, while poorer regions fall behind, widening the gap in development.

2. Inequalities in Income
Poverty exacerbates income inequality, as the rich get richer while the poor struggle to meet basic needs.
Low-income families lack access to quality education, healthcare, and jobs, limiting their opportunities to
escape poverty. As a result, economic growth tends to benefit the wealthier sections of society, further
deepening the divide.

3. Violation of Human Rights

Poverty often leads to the violation of basic human rights, including the right to adequate food, shelter,
education, and healthcare. When individuals cannot afford basic necessities, they are deprived of their
fundamental rights to live with dignity. Vulnerable groups such as women, children, and minorities are
more susceptible to exploitation, including forced labor, human trafficking, and discrimination.

4. Underutilization of Resources
Poverty leads to the underutilization of human and natural resources. People living in poverty often lack
access to quality education and skill development, which limits their contribution to the economy. As a
result, a large section of the workforce remains undereducated or unemployed, reducing overall
productivity.

5. Malnutrition
Poverty is closely linked to malnutrition, as individuals living in poverty struggle to afford nutritious food.
This leads to a range of health problems, especially in children, including stunted growth, weakened
immunity, and higher susceptibility to diseases. Malnutrition also reduces cognitive development and
productivity, perpetuating the cycle of poverty and preventing individuals from fully participating in the
economy.

6. Policy Making
The extent and nature of poverty significantly influence government policy-making. Governments may be
forced to allocate a significant portion of their budget to welfare programs such as food security, housing,
healthcare, and education, sometimes at the expense of long-term developmental projects. This can limit
the government’s ability to invest in infrastructure, technological advancements, and economic growth
initiatives.
Non-Economic Impacts of Poverty
• Increase in Corruption
Poverty often leads to increased corruption, particularly in developing countries. Poor governance,
combined with a lack of access to resources, drives people to seek alternative, often illicit, means of
survival. Corruption flourishes when public officials, police, and other authorities accept bribes, extort
money, or mismanage welfare programs.

• Socio-Political Impact
Social Unrest: High levels of poverty can lead to frustration and discontent among the population, often
manifesting as protests, strikes, or even violence. When people feel excluded from economic growth or
deprived of basic rights, social tensions can escalate. Social unrest is more likely in regions where poverty
is concentrated, leading to instability.

Political Instability: Poverty can undermine political stability by fostering distrust in government
institutions and leadership. People living in poverty are often more likely to feel disconnected from the
political process and may not participate in elections or democratic decision-making, believing their votes
will not bring change. In extreme cases, political instability can lead to the rise of populist or extremist
movements that exploit poverty-related grievances for political gain.

Marginalization and Discrimination: Poverty often disproportionately affects marginalized

communities, exacerbating social divisions based on caste, ethnicity, gender, and religion. Discrimination
against these groups limits their access to resources and opportunities, perpetuating cycles of poverty
and exclusion.